WORKMEN OF THE HERCULES INSURANCE CO LIMITED Vs. HERCULES INSURANCE CO LTD
LAWS(SC)-1960-12-46
SUPREME COURT OF INDIA (FROM: CALCUTTA)
Decided on December 07,1960

WORKMEN OF THE HERCULES INSURANCE COMPANY LIMITED Appellant
VERSUS
HERCULES INSURANCE COMPANY LIMITED CALCUTTA Respondents


Referred Judgements :-

CENTRAL BANK OF INDIA V. THEIR WORKMEN [REFERRED]
CENTRAL BANK OF INDIA VS. THEIR WORKMEN [RELIED ON]



Cited Judgements :-

COMMISSIONER OF INCOME TAX M P NAGPUR VS. SWADESHI COTTON AND FLOUR MILLS PVT LTD [LAWS(SC)-1964-7-8] [REFERRED TO]
P P RAVINDRANATHAN VS. UNION OF INDIA [LAWS(DLH)-1965-12-6] [REFERRED TO]
N S GIRI VS. CORPORATION OF CITY OF MANGALORE [LAWS(SC)-1999-5-82] [RELIED ON]
COMMISSIONER OF WEALTH TAX VS. SAYAJI MILLS LIMITED [LAWS(GJH)-1972-7-14] [REFERRED TO]
BIJOE EMMANUEL VS. STATE OF KERALA [LAWS(KER)-1985-12-37] [REFERRED TO]


JUDGEMENT

Gajendragadkar, J. - (1.)The short question of law which falls to be decided in the present appeal is whether a dispute raised by the employees of a General Insurance Company against their employer for payment of bonus in any particular year can be referred for adjudication by an Industrial Tribunal under S. 10(1) of the Industrial Disputes Act, 1947 (XIV of 1947). This question arises in this way. The workmen of the Hercules Insurance Co. Ltd. are the appellants and the Insurance Company is the respondent before us. On April 11, 1957, the Central Government referred the appellants' claim for bonus for the years 1954 and 1955 for adjudication to the Industrial Tribunal, Dhanbad, constituted under S. 7A of the Industrial Disputes Act, and this reference has been made under S. 10(1)(d) of the Act. Before the Tribunal the respondent urged a preliminary objection against the validity of the reference itself. Its case was that the payment of bonus by an Insurance Company is conditioned entirely by the relevant provisions of the Insurance Act, 1938 (IV of 1938), and that the said provisions did not justify the reference of a dispute in that behalf for adjudication by any Industrial Tribunal. This preliminary objection was based on the provisions of S. 31A(1) and proviso (vii) of the Insurance Act. It was also urged by the respondent that having regard to the limitation imposed on the General insurance Companies by S. 40C of the Insurance Act the claim for bonus made by the appellants could not be sustained. The Tribunal has upheld the preliminary objection thus raised by the respondent and held that the reference is invalid. Incidentally it has also considered the plea raised under S. 40C and has observed that the said plea is also well founded. In the result the Tribunal refused to entertain the reference and dismissed it accordingly. It is against this order of the Tribunal that the appellants have come to this Court by special leave.
(2.)It is common ground that the respondent has paid the appellants bonus equivalent to two months' basic wages for each of the two years 1954 and 1955. The appellants claim two months' basic wages as additional bonus for each of the two years under reference. It is their case that if the trading profits made by the respondent are ascertained from the respondent's balance sheet and the Full Bench formula is applied, it would appear that the respondent has in its hands a substantial amount of available surplus from which the additional bonus claimed by them can be awarded. Since the reference has been rejected on the preliminary ground the Tribunal has naturally not considered this aspect of the problem.
(3.)The preliminary objection raised by the respondent is founded on the relevant provisions of S. 13A of the Insurance Act (hereafter called the Act) and so we must now turn to the said provisions. Section 31A (1) (c) of the Act provides, inter alia, that notwithstanding anything to the contrary contained in the Indian Companies, Act, 1913, or in the articles of association of the insurer, if a company, or in any contract or agreement, no insurer shall after the expiry of one year from the commencement of the Insurance (Amendment) Act, 1950, he directed or managed by, or employ as manager or officer or in any capacity, any person whose remuneration or any part thereof takes the form of commission or bonus in respect of the general insurance business of the insurer. Thus looking S. 31A (1)(c) by itself without the proviso the position is absolutely clear. The respondent cannot be directed to employ the appellants in any capacity so as to include in their remuneration a liability to pay bonus in respect of the general insurance business of the respondent. Bonus under the Industrial Disputes Act is not a part of wages, but the right to claim bonus which has been universally recognised by industrial adjudication in cases of employment falling under the said Act has now attained the status of a legal right. Bonus can be claimed as a matter of right provided of course by the application of the Full Bench formula it is shown that for the relevant year the employer has sufficient available surplus in hand. Therefore a claim for bonus made by the appellants in the present proceedings is a claim in respect of the general insurance business of the respondent, and if allowed it would add to the remuneration payable to them. In other words, bonus claimed by the appellants, if awarded, would, for the purpose of S. 31A (1)(c), be a part of their remuneration, and that is precisely what is prohibited by the said provision.
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